As companies continue to strive for efficiency, consistency and flexibility, computers and software executed on computers are increasingly relied upon to automate, semi-automate, enhance, quicken and make reliable and uniform business processes. As a result of rapidly expanding and increasingly cost-effective data storage and management capabilities and ever-increasing bandwidth in data communications, the appetite for increasingly robust software programs with greater access and use of business data has grown. Tax data may often be stored in computer databases where various operations may be readily performed upon the data, using the vast processing power of today's computer systems. A variety of tax software may assist individual or corporate accountants to prepare accurate tax documents. Many tax software applications are capable of importing required financial data related to accounts from databases of various financial institutions such as banks, mortgage companies, investment institutes, etc.
The convergence of SOX 404 and FASB Interpretation No. 48 (FIN 48) presents tax departments with an unprecedented level of process, documentation, and control requirements. To ensure compliance with FIN 48, tax departments are faced with the need to create a controlled and auditable environment that supports: processes and controls around managing tax positions across the entire organizational structure, all jurisdictions, and over multiple years; the development of a comprehensive inventory of tax positions (certain and uncertain) and balances; judgments regarding the technical merits of the positions; measurement of the appropriate impact to be reported in the financial statements; detailed documentation to be tracked for supporting the judgments around positions and their measured benefit; and new and substantive financial statement disclosures. In addition, with FIN 48, the assessment of the inventory of tax positions is a continual process. With each quarterly financial reporting cycle, decisions regarding the technical merits and proper measurements must be reevaluated, thus requiring the ability to capture and track ongoing analysis, approvals, and related documentation supporting decisions made throughout the process. What is needed is a system that addresses these process, control, and documentation requirements by providing a secure, controlled framework for identifying, evaluating, measuring, and reporting on tax positions—across entities, jurisdictions, and periods—in accordance with FIN 48 and other standards. Existing spreadsheet-based systems and document management tools fall short of facilitating multiple layers of decision making, reducing manual effort, supporting internal controls, and complementing existing tax provision processes. A need exists for a system to help companies comply with the process, documentation, and control requirements of FIN 48; streamline the preparation for, and process of, financial audits; reduce risk, increase accuracy, and improve tax department efficiency and effectiveness; adhere to company-defined SOX 404 controls and FIN 48 processes through a highly configurable, secure, and fully auditable framework.